Abstract
PurposeThis study aims to investigate the effects of economic policy uncertainty (EPU) on Italian hospitality sector. The investigation attempts to explain whether hotel performance drops when the perceived economic uncertainty increases in the period 2018–2022.Design/methodology/approachThe study examines the impact of EPU on hotel performance in a sample of 661 Italian luxury hotels. To establish the relationship between EPU and hotel performance, we employ the generalized estimating equations (GEE) technique on 3,305 hotel-year observations.FindingsThe results show that EPU has a negative impact on hotel performance. More specifically, the analysis reveals that EPU is negatively and significantly related to the revenue per available room (REVPAR), average daily rate (ADR) and hotel occupancy (OCCR). We also look at the role of hotel brand chain affiliation and the moderating effect of conference space and hotel wellness services on the relationship between EPU and hotel performance.Research limitations/implicationsResults provide new evidence for academics to critically evaluate the behavior of luxury hotels under uncertain economic conditions. The investigation offers valuable information also for government, tourism policymakers, tourist hotel owners, hoteliers and tourism managers in their decision-making.Practical implicationsThis study provides strategic implications for practitioners and operators in hospitality industry to evaluate the factors ensuring hotel profitability in periods of EPU.Originality/valueThis paper provides interesting insights into the characteristics and practices of profitable hotels in Italy. Few econometric studies empirically explored the effects of EPU in the hospitality field so far and no prior study investigated this topic in the Italian hospitality sector. Therefore, this paper tries to close an important gap in the existing literature improving the understanding of EPU in the Italian hospitality industry.